Why pending home sales are at multiyear highs

Name: Why pending home sales are at multiyear highs
Uploaded: 2025-12-29T19:22:18+00:00
Duration: 19 min 46 s
Channel: HousingWire

00:00Welcome, everyone. My guest today is lead analyst Logan Motoshami to talk about pending home sales

00:12and purchase apps. Before we dive in, I want to thank our sponsor, Trust in Will, for making

00:17this episode possible. Logan, welcome back to the podcast and you're all in your San Francisco

00:2349ers gear right here. Sarah Wheeler, you and I, when we go on the housing economic

00:29tour, I lost my voice last night for the 49er game, but you and I are going to do the Dougie

00:35on stage, you know. Oh, you think so, huh? Oh, yeah, I know so. So we're going to do that

00:41dance and then we'll make sure to get a video and we'll make an AI thing of it and it'll

00:45be great. Yeah, not sure that's going to happen, but congratulations. Your Niners did. That

00:50was an incredible game. Yes, it was. Okay, so we have some big economic news today. Kind

00:57of surprising to me was the pending home sales. Really? Is it really surprising, Sarah Wheeler?

01:02After all we've done since, what was it, mid-June? Well, but I mean, coming in at the high that it

01:10did, tell us a little bit about what happened here. So I'm not the biggest fan of the NAR's

01:15pending home sales data. I think it's a little bit too wild, but all we have done with our data

01:21the last six months is try to explain that the housing market shifted in mid-June and all these

01:27quote, quote, housing experts kept on posting redfin charts. It was, Sarah, I had so much fun

01:34this weekend because every time the redfin chart came out, people would post it and get tons of

01:39views. I go, redfin strikes again, redfin strikes again. And their pending home sales data, you know,

01:45they look at it on a weekly basis was down. So everybody said home sales are the worst since

01:50or worse than 2000. And people just can't read data correctly. So I said, oh, you're all cute.

01:55Y'all keep doing redfin stuff. So the pending home sales data today, multi-year high. If you look at

02:03the curve of the pending home sales chart versus the curve of purchase application data, they kind of

02:08look the same. So we have what we call flow data over the last three years. But the premise was always

02:14when mortgage rates get below 6.64, head towards six and you get duration, housing demand picks up,

02:21right? Nothing spectacular, nothing, but it does pick up. What has also happened is the growth rate

02:27of inventory once at 33% our data line has now come all the way down to 13%. Now, I don't care for the

02:35last two weeks of December nor the first few days of the new year. I don't even write the tracker

02:42because I think it's somewhat useless. But what we have is a six-month data trend that has

02:47rising demand. The growth rate of inventory has fallen. It is rare for our data to even be

02:54flat to negative in August. It was, right? But we showed this to everyone because we believe reading

03:00is a good thing. And if you've read the tracker and you listen to this podcast, what happened today is

03:06not surprising. But if you're using other people's data and trying to create a narrative,

03:12it backfired. It's the same thing in late 2022, 2023. Late 2022 housing market was the craziest

03:19year ever in history. But the premise was if home sales just stopped going down at 4 million,

03:25the supply and demand equilibrium changes. So the whole thing is to teach supply and demand

03:29equilibrium, right? And now what has happened is some of the pricing data has firmed up a little bit,

03:34nothing spectacular, but firmed up. And then we go and get ready for 2026. But this was all here for

03:42people that believe in reading. And the problem is we have other people that massage data, they take

03:47the narrative and they just, you know, try to say something. And I, it is rare for me to see a total

03:53shock on social media, but we had a lot of yappers over the weekend and it was just like dead silent.

04:00It was just like, is anybody, anybody, anybody up? I know you're all in Niner fans partying last

04:07night. Anybody here? So there was, it was a perfect way to end 2026 for people who track data, who show

04:15it, who create models, you know, all of our, all of our data in the tracker. And then now we get ready

04:20for 2026. So I thought it was a fitting end, but I encourage everyone, you could go to Twitter,

04:25look, look at the head, the pin tweet. We've showcased everything and we're just going to end

04:31it off 2025. Like this way, chef kiss Wheeler. We're going to do the Dougie in Dallas, Texas at the

04:39economics of it. Okay. So, um, let's talk about purchase apps, which is, um, you wrote an article

04:46this weekend because you weren't writing the tracker. You wrote about like kind of looking back over

04:50purchase apps, uh, this year and where we are and, and what to take from them, because it is a very

04:55confusing data line. Like it doesn't seem like it at first, but when you dig in, it's like, sometimes

05:01it says stuff and you're like, what does that mean? People can, uh, interpret it really badly. So I

05:06thought you did a great job on that article kind of laying out, like, here's how you should look at,

05:10and here's what happened this year. So purchase application data is a trend survey data. Like if you look

05:17at existing home sales, going back to the 1990s, early 1990, and then you look at purchase application

05:22and they flow together, right? You know, but it's volume growth versus volume growth with existing

05:29home sales. If you, if you just with a, just the naked eye, you can see them and they go, okay,

05:32they trend the same. But the confusing aspect is the percentage data can lead people to think home

05:40sales are crashing or home sales are booming and not much is happening. So when we went into 2025,

05:462025, the, it was the lowest bar in purchase application data you're ever going to get in

05:52history. Uh, because what happened in 2024 is mortgage rates started the year heading up to

05:57seven and a half percent home sales weren't crashing, but they weren't growing and they were slightly

06:03declining. So we just had the ultimate low bar ever. Our best sales prints have actually come when

06:10purchase application data was negative year over year, which is confusing to people, but that's what

06:14happened late, late 2022 and mid 2024. A lot of people thought home sales were falling because

06:19purchase application data was down year over year, but the week to week data wasn't. This is why we

06:24like our tracker, our pending sales data, everything. Just remember this whole thing happened because

06:29rates went below 6.64 and then purchase application data like it has the last three years. The week to

06:36week data is more positive early in the year. It was very choppy. It was positive. One week,

06:41flat one week, down one, you know, we didn't get any consistency here. The last 20 weeks since rates

06:48fell, we had 11 positive weekly prints, nine negative 20 weeks straight of double digit year

06:53over year. That is a positive curve. And now pending home sales are at a multi-year high. Existing

06:59home sales are at a nine month high. Don't make it over complicated, right? If you see week to week

07:05growth, right? And then you get year over year growth with it. That is a positive trend.

07:09So I think the confusion has been that people see these 20, 26% year over year growth, and they

07:17naturally think that means, oh my God, home sales must be up 15, 20%. That's never the case.

07:23So this is why in the tracker, we like to show the weekly pending sales, the total pending sales with

07:28kind of a four week moving average theme, and then purchase application data, and then just flows with

07:33it, right? So I get it. It's very confusing because late 2022 and mid 2024 really didn't see any year

07:41over year growth, but those were like really big sales prints. Like February of 2023, we had near

07:47500,000 home sales month to month. That's not normal, but sometimes this occurs. And again,

07:55we created the tracker for everybody to read, and then you get the real data and you just flow with it,

08:00right? That's why we want waves and channels and flows. They all kind of work together.

08:05So what happened this morning shouldn't be a shock because it kind of started in mid-June.

08:12Started in mid-June. I think the thing that you brought up too about in your, like, how did we

08:20have this much of a beat when it came to purchase apps, and then you didn't see the home sales,

08:25was about inventory. So maybe talk about that a little bit.

08:28Well, here's the thing. With inventory, the growth rate of inventory peaked around 33% and

08:34kind of mid-June, that was kind of it. And then at that point, then rates went lower. So when it's

08:42really simple, rates went lower, demand picked up, growth rate of inventory slowed down, right?

08:49It's not 2008. It's not worse than 2008. So I'm not a person, I'm on an island on this. I do not

08:57believe in the, you need more inventory, more home sales. I think it's a false narrative because I

09:04can prove it now. Because in 2020, 2021, and early 2022, we had a lot more home sales with less active

09:13listings, right? So just keep this as simple as possible. There is no, there's no home supply.

09:20Buyers and sellers close transactions much faster now than any other time in recent history.

09:26So you can have inventory active listings at all time. You can have 2 million more home sales.

09:31It was very hard for me to explain this in the last decade, because people kept to say,

09:36there's no homes to buy. There's plenty of homes to buy. The demand curve isn't as strong as people

09:40think. But here, we have the greatest evidence in history that it's not supply. It's just the supply and

09:46demand equal. And when demand picks up, you don't get a lot of active listings growth in that

09:51environment. So here, active inventory just kind of slowed down and then it had its seasonal decline.

09:57Demand picked up a little bit. That's it. That's not the sexiest story, but it worked again,

10:02right? It worked in late 2022, early 23, it worked in mid 2024, and now it's worked in 2025. So you have

10:09a theme for 2026 on how to look at housing data with live, fresh, weekly data that's current,

10:17looking out forward. That's what we believe our advantage is, that it takes three to six months

10:22for people to, oh, what happened here, right? You do not have to be old and slow. You could listen to

10:31the data, look at it, take it. You could track it with any zip code, any city, any state. That's the

10:37beauty of Altos data that we're showing. My job is to incorporate the economic model. Why?

10:42Because I look at the housing market as flowing with the 10-year yield, right? Why do we do this

10:47slow dance, Sarah Wheeler? To show. Sometimes they're close, sometimes they're farther apart,

10:52but they always go together. But they always dance with each other, right? And the whole narrative that

10:58the mortgage rates move around the mortgage-backed security markets, no, it moves with the 10-year

11:02yield. So 1971 now to 2025, that slow dance continues. And what drives the 10-year yield

11:08this year? Guess what? It was labor market, right? Inflation was up. My favorite thing this year was

11:17the treasury supply. We have so much treasury supply. There's no way we can do, there's no

11:21buyers for all this. We're broke as a country. 10-year yield right now, as of this second, was like

11:26411 last time I checked. And then on top of that, a lot of people saw it. Well, the growth rate of

11:33the economy is picking up. Yes, we had a 4.3% GDP print, which is funny because the Atlanta Fed was

11:41always forecasting good growth. I think nobody believed it. Yet 4.3% GDP, 10-year yield went

11:46where? 420. We've talked about this for many months, Instagram family. And then the labor data

11:52conference board came out another weak number. 10-year yield has fallen since then. So it kind

11:58of all worked this year, right? And we could show everyone this because we show the data and the

12:02charts and paper, rock, scissors, labor over inflation, labor over inflation one. And now you go

12:08into 2026 thinking, wait a second, we've had 1.75% rate cuts into the system. Mortgage spreads are at a

12:16three-year low. Mortgage rates are near 6%. Be the detective, not the troll.

12:24Be the detective. And the next time I talk to you, you will have written your 2026 forecast. I know

12:30you're already working out. I will have edited it. And that's what we're going to talk about next time.

12:33Yes. And one thing I've learned is I remember reading my 2018 forecast and, oh my God, I think I had

12:41every single data line you could possibly have on planet Earth. And it was way too long. And it's

12:46just, I'm an economics person first, housing second. So I want to get industrial production

12:51in there and service PMI and all this stuff. And it's just not, and for 2026, we're just going to

12:58keep it as simple as you possibly can. Why? Because I do not believe in the concept of a forecast

13:04without a live tracking model. So you hold everyone accountable. We have all these doomers out here.

13:09So they either forecast really, really big national nominal home price crashes and just keep on doing

13:15it every single year, but don't provide their model. Why? Because they don't have it. Because

13:19if they did, the model's wrong. Our job is to do this every single day, every single week,

13:25every single month. We flow with the data. That's why forecasts are irrelevant without a working model.

13:31This way, if something changes, like we've seen in late 2022, like we saw in mid 2024, like we saw in

13:38mid 2025, we flow with the data. It's like what Bruce Lee said, water, be like water. Water flows

13:46into a cup, it becomes the cup, right? So flow with the data. If the 10 year yield goes lower and demand

13:52picks up, be like water. But at the same time, I do want to say like, you're not somebody who changes

13:59your forecast. So you forecast a range for mortgage rates. And every time in the tracker,

14:04you're like, here's what I said mortgage rates are going to be. Here's what a 10 year yield. Here's

14:07my range. Here's where it is. You're like, here's where I said home price is going to be. Here's

14:11where it is. So it's not like when you say flow with it or flow like water that you're, you know,

14:16just like changing on a dime. You're explaining how that, you know, impacts and, and informs your

14:23forecast.

14:24Because I, I, I'm a teacher and I'd rather teach how housing economics works. So the forecast just

14:29stays. I know a lot of people change their forecasts weekly or monthly. There's nothing wrong with

14:34that. I just, I'd rather show what's going on and teach people how you get there, right? If the 10

14:39year yield is above 470, the peak of the forest has the, the economy is doing really good, right?

14:44The market believes if the 10 year yield is below 380, borderline, right? 2024, the market believes

14:51we're going into recession. We weren't going to recession. So bond yields went up. Now the 10 year

14:56yield is at the lower end of why this becomes now a personal thing. Why do you believe the 10 year

15:02yield is here? A lot of people say there's no way rates could go lower. Treasury supply,

15:06inflation is rising, all these things. It didn't happen, right? 65 to 75% of where the 10 year yield

15:14can range where mortgage rates range is still fed policy. And every single year since late 2022,

15:20when there's a growth scare or a labor scare, the 10 year yield goes lower. But now, unlike back then,

15:27we've got 1.75% rate cuts in the system. Oh Lord have mercy. What's going to happen in 2026? I don't

15:34know how this whole Trump fed chairman, how that, you know, going after the regional, but I don't

15:39know how that's going to work out, but I can at least flow with what the data has shown us for

15:43decades and decades and decades. And then we could correlate it to purchase application data, weekly

15:48sales, pricing, everything. It's the whole enchilada. It is not the sexiest thing to do,

15:53but it's the correct way to talk about housing economics. And I think that that's the things

15:59that you decide to track in the weekly. It's for a reason. Like you said, you have all these data

16:05points you could point to, you could, but you track very specific things and you've narrowed it down so

16:10that it's very housing focused and also so that it's just doable, right? For you to do, but also for

16:17us to ingest and read and get, get something from it. Like this is what this means for my business.

16:22I always said that our data is for professionals, like people that are serious. Our data is not

16:29good for what I call the doom porn crowd or third party regurgitators, right? Third party regurgitators

16:35are people with fake names running around the internet saying they're housing experts. By the

16:39way, you know, the whole stick I do. Okay. So I want to name, I want to face, I want five years of

16:42forecasting and a working model. I can't get anybody on planet earth to give me five years first.

16:47I'm not reducing it out of two years. I can't even get anybody to do that. But this way,

16:51the model is more important than any forecast because if it gets better or worse, you go with

16:57it. And this way you could teach people because what's happening in Austin is different than New

17:01Jersey. What's happening in New Jersey is different than Montana. What's happening in Montana is different

17:06than what's happening in Florida, right? Everyone has access to your own zip code or city estates.

17:11My job, I was on the economic side. On the whole, Grant Molly of housing economics is really general

17:17U.S. economics. Why? Because I am to the essence, a bond market guy first and foremost and nothing

17:23else, right? That's how everything I do flows off of that.

17:27No, I think that's really good. And February 10th, you and all of our many smart economic friends

17:34and the leaders of economics throughout the industry are going to be there. Housing economic summit. It's

17:40going to be amazing having everybody in one place. These are all people with forecasts and models and

17:46names and faces and people we trust. And it'll be a great day.

17:50Yes, it will. Again, when you can get all the nerds into one place for one day, that rarely happens.

17:56Like that never happens in my life. So that's why I like the housing economic summit because it's just

18:01all nerds into one day event and everybody talks about the things. And it's always good.

18:07Everybody's perspective is always going to be a little bit different, but everyone's model

18:11is different as well. So it's a wealth of knowledge and a wealth of ways to track kind of housing.

18:18We've also set up, it's like you have a session that's like, here's the economic data. And then

18:22you have a session of like, here's tactically how you should think about that data, how you can apply

18:27it. Because we know like people need very, you know, like, okay, what does this all mean? How does

18:32this affect my business? So it's going to be a great day. Yes. And 2026 is going to be very

18:37interesting. I've never, I've never dealt with a situation where we have an active president

18:41putting in his own people for the federal reserve. So it's, it is what it is. You know,

18:47everyone can have their views on it, but it'll be a great test case on what can happen, which makes

18:53things a little bit more complicated than normal. But again, we do channels with a 10 year yield

18:58because we think that drives mortgage rates and what drives mortgage rates flows with the data

19:02really after 2010, right? When qualified mortgage came into play, the whole housing structure dynamics

19:08in the general, the U S economy shifted with those two laws, the 2010 qualified mortgage and the 2005

19:16bankruptcy reform laws. It is not a coincidence that after that, if you did not have COVID, we would

19:22still have the longest economic and job expansion in history. Those two laws were, were historical

19:28game changers for the U S economy. Amazing. Okay. Logan, thanks so much for being on. We will talk to you

19:35again tomorrow. Pleasure.

Why pending home sales are at multiyear highs

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